"We have been very diligent, made a great deal of progress and come back from a long, down period," said Twa, who arrived on the job four years ago and had to immediately cut $50 million out of the county's recession-struck budget. "We are (now) trending in the right direction ... but we still have to be cautious. This economy will recover, but it will be slow."

On the plus side, Twa projects a modest 2 percent increase in 2013-2014 property tax receipts based on rising home values. The county saw a nearly 1 percent boost this fiscal year in its tax revenues following four years of declining or flat returns.

In addition, Twa told the county's five-member elected board he will recommend spending $12 million next year -- up from $5 million this year -- for long deferred health and safety repairs on aging buildings.

Aided by the county's payoff plan for post-employment retirement benefits, new federal dollars through the national health care insurance program and prior employee wage and benefit concessions, Twa also said the county's roughly $1.2 billion annual budget will balance without dipping into reserves.

"This year's report was a lot more uplifting than those you have given in the past," said board Chairman and Supervisor Federal Glover of Pittsburg. "We all obviously have a lot more work to do."

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But for many county workers who have all been asked to take on more work, earn less and pay more for benefits, even a 1 percent raise would cost more than what the county anticipates it will collect in additional property taxes or other sources.

Twa cited the county fire district's fiscal meltdown, pending labor negotiations with two-thirds of its employees and uncertainty over funding for former state prisoners as further concerns.

By far, pensions are the biggest budget cost driver, Twa said.

While Gov. Jerry Brown signed pension reform legislation, Contra Costa public employees are suing over a provision that bans the inclusion of unused vacation, sick leave and other pay in the retirement calculation formula. These dollars can increase an employee's retirement checks by as much as 15 percent, depending on the plan.

The Contra Costa County Employees Retirement Association will also this year review its assumed rate of return, or the percentage it estimates its fund will earn over time. Other retirement funds have lowered their rates in the wake of losses suffered during the market crash, which means public agencies and working employees will likely pay more toward those benefits than they do today.

The fire district, meanwhile, is running out cash and will look at closing more stations in July, Twa said. It shuttered or partially closed four stations this month. The county expects to hire consultants to help overhaul its ambulance and fire services.